In a pinch, fast access to cash can help you cover an emergency or unexpected crisis. But one of the most unattractive aspects of credit card cash advances is how expensive they can get. Not only is the interest rate usually higher than on regular credit card purchases, but you’ll typically have to pay a fee too.
Drawbacks of Cash Advances
- Most carry a fee of 3% to 5% of the advance amount, with a minimum of $10
- The interest rate is typically higher than on purchases (in some cases, 10 percentage points higher or more)
- Interest accrues with no grace period (meaning you can’t avoid finance charges even if you pay your bill as soon as you get it)
- Only a portion of your credit limit may be available for cash advances
- Some ATMs limit the amount of cash you can withdraw in a single transaction and charge an ATM fee
If you’re considering tapping into your credit card’s available credit to access cash, stop and consider the options below first. There are, in fact, creative ways to get cash from a credit card without actually requesting a cash advance. These methods may have costs, too, but depending on how much cash you need, they may be more affordable.
Plus, if you have good credit and qualify for a new credit card, taking these steps using a card with an introductory no-interest offer may help reduce your expense even more, particularly if you just need some time to catch up after a sudden crisis.
Purchase a Prepaid Gift Card
Buy a prepaid gift card with your credit card and then sell it to someone for cash. You may have to accept a little less than the face value of the card to incentivize someone to purchase it from you, but there are several online marketplaces to assist you: Cardpool, Giftcard Granny, and Raise, to name a few. Just make sure whatever discount you offer is less than what you would have paid in cash advance fees and interest.
If you have accumulated credit card rewards, you may be able to redeem them for a gift card, sometimes even for more than face value. For example, you may be able to get a $25 gift card for rewards worth $20.
Find a Friend Who Uses Cash
If you have a friend or relative who’s planning to make a big purchase in cash, you can make the purchase for them, using your credit card. In return, your friend can give you their cash (or deposit the funds into your bank account, perhaps using a peer-to-peer payment service.)
The above scenario doesn’t break any rules. However, many major peer-to-peer payment providers forbid actually using their service to get a cash advance from your credit card, and they could suspend your account or take legal action if you do. User agreements for PayPal, Venmo, and Cash App, for instance, all explicitly prohibit this.
Shift Your Bills Around
If you can use your credit card for something you would normally pay for with cash (or with money in your bank account,) go ahead and free up that cash. This could be particularly helpful if you get a new credit card with an introductory no-interest offer that buys you time to catch up without accruing interest.
Some billers (like many landlords) charge a convenience fee when you pay a bill with a credit card, so make sure to compare your overall costs before choosing the most affordable way for you to get cash. Ideally, the fee is less than the cash advance fee you would otherwise pay, but even if it isn’t, if you’re not hit with a higher cash advance APR, it may still be worth it.
Buy Something With Your Card, Then Sell It for More
If you’re willing to shop around, you may be able to use discounts, sales, or credit card rewards to purchase items at below-market prices. Then you can sell those items online or to a friend at a higher price. The profit may give you the cash you need, plus a little extra to cover your interest charges if you need some time to pay off the credit card balance. Of course, there’s a chance you won’t be able to make a profit or sell the item at all.
What to Watch Out For
- Many credit card issuers treat things like money order purchases or credit card-funded wire transfers just like cash advances, so don’t be fooled into thinking you’re escaping the higher fees and interest rate of a cash advance if you choose one of those options. Check the terms of your credit card agreement to see how these cash-equivalent transactions are defined.
- While these alternatives may be less expensive than a cash advance, don’t forget you’re still using your credit card to borrow money. If you can’t afford to pay off your credit card balance each month, you’ll still incur finance charges, albeit at the normal APR associated with purchases.
- If you’ve had a sudden change in your financial situation, you may be distracted. To avoid the possibility of an over-the-limit fee, make sure you have enough available credit to make one of these moves.